| As whole show of an enterprise, top managers hold the balance and play the pivotal role in the production and management process in the modern enterprise. Establishing a set of effective motivation systems to arouse their enthusiasm is the key to an enterprise's survival and its development. For the listed companies, it is more importantly.In this paper, the theory is summarized on the basis of massive research of Chinese and foreign literature in correlative domain. Performance Evaluation, and the composing and influencing factors of top managers'compensation in listed companies are concluded and summarized. Furthermore, detailed investigation and research is done on the characteristics of listed companies in the Jiangsu Province, which includes the distribution of area and industry, the scale and the quantity, administration as well as the operating efficiency of, consequently, provided the basis for the further research.Since long-time, compensation of top managers had little correlation with enterprise's performance, thus cannot exert its incentive function which is supposed to. Along with the establishment of modern enterprise system and the gradual deepen of enterprise's administration, the connotation of top managers'compensation and motivations have developed and enriched continuously. Use successful experience of overseas enterprises for reference, top managers'compensation has more correlation with enterprise's performance than ever before.The selection of evaluating indicator in enterprise'performance evaluation has significant influence on the validity of the result. On one hand, in our country, stock price has a biggish fluctuation because it is affected by many market factors, as a result of immaturity and nonstandard status quo of our country's stock market and its operation. Consequently, the stock price is not suitable index to weigh enterprise's absolute performance in certain period. On the other hand, it was hard to acquire the ROA index from information disclosed in the annual reports by listed companies. Therefore, ROE is selected as the evaluating indicator in this article to evaluate the absolute performance of listed company.Regression analysis model was established to investigate the correlation between top managers'compensation and the absolute performance of listed companies, theresult indicates that, take single financial index as the only standard in performance evaluation may increased top managers'performance risk, cannot accurately reflect their efforts and capability , so it still unable to provide effectual incentive. Therefore, this paper started with the data of top managers'compensation disclosed by the annul report of listed companies in Jiangsu province in 2005. According to the peculiarity of our country's economic system and listed company, four basic financial indices are selected : profit margin of total assets, profit margin of net assets, ROE and EPS, Delphi law is used to acquire the weight of each index on the basis of exports'opinion, then a model is set up to measure and evaluate the relative performance coefficient based on efficacy coefficient method, the relationship between relative performance and motivation status is studied through empirical study on listed companies in certain industries in Jiangsu province.Through the contrast of different results from APE and RPE, it could find that RPE based on efficacy coefficient method can remove disturbance of uncontrollable factors within an industry, it also had a better reflection of top managers'actual effort and level than APE. Therefore, according to the specific status of enterprise, plan the compensation based on relative performance for top managers, has rationality both in the theory and the practice. |
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